Correlation Between Perimeter Solutions and International Flavors

Can any of the company-specific risk be diversified away by investing in both Perimeter Solutions and International Flavors at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Perimeter Solutions and International Flavors into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perimeter Solutions SA and International Flavors Fragrances, you can compare the effects of market volatilities on Perimeter Solutions and International Flavors and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Perimeter Solutions with a short position of International Flavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perimeter Solutions and International Flavors.

Diversification Opportunities for Perimeter Solutions and International Flavors

0.58

Correlation Coefficient

Perimeter Solutions  International Flavors

Very weak diversification

The 3 months correlation between Perimeter and International is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Perimeter Solutions SA and International Flavors Fragranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Flavors and Perimeter Solutions is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Perimeter Solutions SA are associated (or correlated) with International Flavors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Flavors has no effect on the direction of Perimeter Solutions i.e., Perimeter Solutions and International Flavors go up and down completely randomly.

Pair Corralation between Perimeter Solutions and International Flavors

Considering the 90-day investment horizon Perimeter Solutions SA is expected to under-perform the International Flavors. In addition to that, Perimeter Solutions is 1.51 times more volatile than International Flavors Fragrances. It trades about -0.21 of its total potential returns per unit of risk. International Flavors Fragrances is currently generating about 0.0 per unit of volatility. If you would invest  8,425  in International Flavors Fragrances on February 2, 2024 and sell it today you would lose (26.00) from holding International Flavors Fragrances or give up 0.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Perimeter Solutions SA  vs.  International Flavors Fragranc

Perimeter Solutions

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perimeter Solutions SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Perimeter Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

International Flavors

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Flavors Fragrances are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, International Flavors is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Perimeter Solutions and International Flavors

The main advantage of trading using opposite Perimeter Solutions and International Flavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perimeter Solutions position performs unexpectedly, International Flavors can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in International Flavors will offset losses from the drop in International Flavors' long position.

The idea behind Perimeter Solutions SA and International Flavors Fragrances pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.